Although some people think that the only place to build new manufacturing plants in the U.S. is in the southern states, a team of global companies has constructed one of the most flexible powertrain plants in the world in Michigan.

Although some people think that the only place to build new manufacturing plants in the U.S. is in the southern states, a team of global companies has constructed one of the most flexible powertrain plants in the world in Michigan. Why? One answer is talent.

There is a part of the industrial Midwest where a team of auto makers–American, Japanese and Korean–are investing hundreds of million of dollars to build class-leading 4-cylinder engines, right in the backyard of the UAW, in facilities that are characterized not only by flexible equipment, but also flexible work rules. The people behind this endeavor?—DaimlerChrysler, Mitsubishi and Hyundai—are betting the highly-skilled workforce in the region will be the gem that makes GEMA (Global Engine Manufacturing Alliance LLC) a success.

In the rural locale of Dundee, MI, (population 3,500) the partners have invested approximately $400 million in the North plant, which began pumping out saleable engines in late-September. An additional $320 million will be plowed into a second South plant, which will mirror the 600,000-ft2 North plant when it begins production in October 2006. Each plant will have built-in capacity of 420,000 engines at full-line speed. Although $720 million sounds like a lot, Bruce Coventry, president and CEO of GEMA, says the amount of total investment at the plant is nearly 50% less than a typical powertrain plant of its size and output. (Similarly unusual is that when we meet with Coventry, he is outfitted in the same GEMA uniform—a black and grey GEMA shirt and black Dockers pants—worn by everyone else in the facility: “I’m not the important one here,” he says.)

How are they achieving the savings? GEMA utilizes CNC machining technology to an extent not typical of powertrain manufacturing. This helps not only provide flexibility, but also keeps tool costs down. Coventry says the 168 Nippei Toyama Corp. CNC machines, along with the total 222 pieces of automated equipment within the plant, reduced overall manpower requirements to a 3:1 ratio, with most of the manual labor limited to the final assembly operations. The extensive use of CNC also paves the way for the plant to potentially produce hybrid and diesel powertrain systems on the same machines as today’s line. “A machine that is making cylinder heads today can be making different parts tomorrow,” Coventry says. “We can do housings for a hybrid motor on the same tool as the existing engines.”

Many observers would surmise the lower employment levels might ire the union, but labor was willing to work with plant management to build an operation that is both flexible and sustainable long-term. “The union demonstrated a tremendous willingness to compete on a global basis,” Coventry says. Among the advancements agreed to by the UAW were streamlining job classifications to a single listing—operator—and flexibility in work scheduling. The high level of automation helps limit the number of people used on the full line during a single shift to 27, a significant reduction from the 350 people level used at Chrysler’s four-liter engine plant in Kenosha, WI. Automation rates are nine machines to each operator on the block line, 11:1 on the header line and 10:1 on the crank line. To further demonstrate the leanness of the plant: There is only one mechanical and electrical engineer assigned to each shift, with the traditional “manufacturing engineering department” mothballed, replaced by “technical support specialists” integrated onto plant floor operations. The plant operates on a three-crew, two-shift operation at 120 hours per week. Workers rotate on a regular basis through the various day/afternoon/midnight shift patterns. Workers are required to have a minimum of a two-year college degree.

The GEMA experiment relies heavily on supplier support. In the area of tooling, GEMA relies on its cutter grind supplier, Mahar, to maintain tooling inventory. GEMA does not pay for any of the tooling on site until it is installed in the machine. “All that (tooling) inventory on the floor is not on my books,” Coventry says. “I pay for that tool when it comes out to my line.” Minority-supplier TDS/US manages all material handling and logistics within and outside the plant. The supplier will provide the completed engines to Chrysler’s Belvidere, IL, assembly plant, where the World Engine will find its way into the Dodge Caliber and other Chrysler vehicles. Coventry says Mitsubishi will begin sourcing engines from GEMA in the fall of 2008, while Hyundai-Kia has been in discussions about obtaining engines for its Montgomery, AL, assembly plant, but no firm decision has been made.

Modularity is another important function that helps GEMA stay lean. Pistons arrive at the plant with rings already installed, while balance shaft modules arrive ready for direct installation. Casting suppliers are responsible for completing up to 80% of grinding operations, which will likely prevent defective parts from arriving at GEMA’s docks. “What we really want to do is keep the problems at the supplier and identify them before they get into our production system,” Coventry says. Complete engine parts, including accessory drives, intake and exhaust manifolds, are shipped directly to TDS/US, where the engine receives its final dressing before shipment.

While Coventry and his team would be among the first to downplay GEMA’s significance within the auto industry, there’s little doubt GEMA is a breakthrough. Using proven tooling and processes, GEMA was able to acquire its hardware at a much lower price point than it would have if it used custom tooling, while management monitored every aspect of the manufacturing process with a mindset for continuous improvement. Line workers even attended “Pit Stop Practice” with teams from Roush Racing to shift their thinking to identify ways to speed processes inside the plant. Coventry says management had set a goal to get tool change times down to five minutes, but through the Pit Stop classes, line workers were able to identify ways to conduct tool changes in less than one minute on mill cutting operations.

The key point in the GEMA exercise is the ability to control every input within the organization. Planners were able to design the operation from the ground-up, working alongside engineers to develop a product that was less complex to assemble, while training a fresh workforce. Now, it’s time for Coventry and his team to hold their breath and hope everything runs like clockwork. If it does, Coventry is likely to be a popular man within Chrysler, where he will undoubtedly be asked to provide insight on how to improve powertrain manufacturing operations at other facilities down the road.